Accelerated delivery to our
Go-Forward Bank
Ross McEwan
Chief Executive Officer
Bank of America – Merrill Lynch conference
London, 29 September 2015
Our blueprint for lasting success
(1) During the period of CIB restructuring. (2) Excludes restructuring, conduct, litigation and intangible write-off charges as well as the operating costs of Citizens Financial Group and Williams & Glyn.
Services (GFS) norm currently stands at 83%.
(3)
Global Financial
1
Building long-term shareholder value
Phase 1 – 2014
Phase 2 – 2015/16
Building financial strength
 Rebuild capital strength –
CET1 ratio +260bps
during 2014
 De-risk – US ABP, RCR,
NPLs, liquidity portfolio
 Start cost reduction plan –
£1.1bn savings achieved
 Simplify our organisational
structure – 7 divisions to 3
franchises
Phase 3 – 2017 to 2019
Becoming #1
Improve our Go-Forward Bank
and accelerate our Exit Bank
 Accelerate the transformation
of our Go-Forward Bank
 Achieve material RWA reduction
in our Exit Bank
 Cement customer-centric
positioning – #1 for customer
service, trust and advocacy
by 2020
 Achieve attractive, balanced
and sustainable financial
returns – target 12+% ROTE
in 2019
 Address other material
remaining issues within
our control
 Discussions around resumption
of dividends / buy-backs(1)
 Pay out surplus capital above 13% CET1
ratio subject to PRA approval(1)
(1) Subject to PRA approval. In addition, key milestones before seeking PRA approval for capital distributions would include, among other considerations, reaching the 13% CET1 ratio target, achieving confidence in
sustainable profitability, improved stress-testing results and operating within risk appetite, peak of litigation and conduct costs passed and at least £2 billion of AT1 raised.
2
Our Go-Forward Bank
UK focused Retail & Commercial bank
With Markets and international capabilities to meet our clients’ needs,
primarily focusing to support their UK and Western European operations
Business mix shift towards the UK…
Non-UK
Illustrative split by total income
…with emphasis on Retail & Commercial
UK
CIB(1)
Illustrative split by RWAs
~10%
~30%
~35%
~90%
2008
(1) Wholesale
~15%
~50%
~60%
~40%
R&C
~70%
~65%
~50%
Current(2)
defined as GBM in 2008 and CIB for current and Go-Forward
~85%
Go-Forward(3)
(2)
Current are the FY 2014 numbers includes Citizens
2008
(3)
Go-Forward defined as 2019.
Current(2)
Go-Forward(3)
3
Our Go-Forward Bank
RBS in 2019
Personal &
Business
Commercial &
Private
Corporate &
Institutional
Our
Customers
Our
Primary
Brands
 #2 UK Personal Current
Accounts
Our
Market
Positions
 #3 Ireland(1) Personal
Current Accounts
 #2 UK Business Bank
main relationship
(1)
Republic of Ireland.
 #1 SME Bank
 #1 UK Commercial
Bank
 #1 UK Private Bank
 Top 3 UK Rates, FX and
DCM
 Top 3 European
Structured Finance
 Top 3 Western Europe
Investment Grade
Corporate DCM
4
Our Exit Bank
Rapid reduction in Exit Group RWAs expected
Illustrative run-down of RBS Exit Group RWA, £bn
-80%
172
148
~30-40
FY 2014
H1 2015
FY 2016 target
5
Good progress against 2015 goals
Priorities
1
Strength & sustainability
2015 Goals
 RWAs reduced to below £300bn
 £326bn RWAs
 RCR exit substantially complete
 Funded assets down 78% since
 Citizens exit
 AT1 issuance (£2bn)
2
Simplifying the bank
 Cost reduction of £800m(5)
 Net Promote Score (NPS) improvement
3
Customer experience
4
Supporting growth
H1 Progress
in every UK customer franchise
 Lending growth in strategic segments
in line with nominal UK GDP growth
initial pool of assets identified(1)
 Further sell-down priced in late July 2015(2)
 £2bn AT1 issued
 Over £700m annualised cost savings
achieved in H1
 Improvements in NatWest Personal.
NatWest Business, RBS Business(3) Ulster
Bank Personal (Northern Ireland)(4)
 2% annualised growth in UK PBB and
Commercial Banking
(1) Funded assets are down 71% since 1 Jan 2014. (2) Following the offering RBS will deconsolidate Citizens for accounting purposes from Q3 but will continue to consolidate 100% of RWAs for regulatory purposes. (3) Further
details in slide 13 (4) Source: Internal research – Coyne Research June 15 based on 4 quarter roll with latest base size 365. (5) Excludes restructuring, conduct, litigation and intangible write-off charges as well as the operating
costs of Citizens Financial Group and Williams & Glyn.
6
1. Strength & Sustainability
Operating Costs Consistently Reduced
Adjusted cost reduction progression (£m) (1)
14,010
-20%
-12%
6,859
12,398
6,344
5,485
2013

2014
H1 2013
H1 2014
H1 2015
Significant future cost opportunities:
- Reducing costs in currently very high cost:income franchises (primarily CIB but also
Ulster and Private)
- Operational improvements in UK PBB and Commercial Banking
(1) Adjusted
costs excluding restructuring and conduct and litigation.
7
1. Strength & Sustainability
Continue to invest >£1bn per annum in improving IT
Transformation Plan
Strategic Theme
2015 Target (£m)
2015 – 2017 Target (£m)
Strength & Sustainability
(640)
(1,560)
Employee Engagement
(90)
(190)
Simplifying the Bank
(200)
(590)
Customer Experience &
Supporting Growth
(410)
(1,150)
(1,340)(1)
(3,490)(1)
Total
(1)
Excludes investment in property exits & refurbishments (~£650m), ‘Other Discretionary’ (~£550m) and W&G and ICB investment (~£1.5bn). Rounded to nearest £10m.
8
1. Strength & Sustainability
Capital and balance sheet resilience
CET1 Ratio: 13% Target
Leverage Ratio
Non-Performing Loans £bn
(Risk Elements in Lending)
(as % of Gross L&As)
+670bps
15.3%(1)
5.3%(2)
39.4
(9.4%)
3.0%
0.7%
+190bps
-53%
RCR
3.4%
24.1
8.6%
18.7
(5.8%)
(4.8%)
4.6%
12.3%
7.4
Ex
RCR
11.3
15.3
(3.0%)
(3.7%)
Q4 2013
Q2 2015
Q4 2013
Q2 2015
Q4 2013(3)
Q2 2015
(1) Pro-forma impact of the full disposal of Citizens at 30 June 2015. Assumes full removal of RWAs excluding operational risk and, for simplicity, no capital gains or losses assumed. (2) Pro-forma basis, assuming the
divestment of Citizens and including the benefit of AT1 issuance. (3) RCR was created on 1st January 2014. Q4 2013 assumes the numbers have not moved between the 31st December 2013 and 1st January 2014.
9
2. Simplifying the Bank
Click to edit Master title style
We are becoming simpler
Total Number of Properties(1)
-14%
Number of Programmes
-16%
2,900
-67%
550
2,500
-18%
2,100
1,500
182
150
2013
2014
2015
2016
2013
Number of products(2)
2015
Number of registered companies
-6%
-22%
-32%
295
2014
144
1050
146
984
-14%
266
200
2014
H1
2015
End
2015
Front Book
(1) Whole
849
112
2014
H1
2015
End
2015
X
H1 2014
2014
H1 2015
Back Book
bank including branches and head office properties. Williams & Glyn included up to end 2015. (2) Excludes CIB and GTS. Notes: The objectives set on this slide are forward looking statements - See the last page
of this presentation.
10
11
3. Customer experience
Our customers deserve the optimum experience
Stronger
UK & Ireland
focused bank
IT resilience and
security; mirror bank
enabled
Transformation plan £3.5bn to be invested
over 3 years
Investing in our
leadership culture
Simpler
Apple Pay
availability &
Apple Watch app
Touch ID login
Real time app
registration as
current account
opened
Faster, more local
lending decisions &
quicker current
account opening
Fairer
Stopped teaser
rates/zero balance
transfers
Retail & Business
T&C’s on 1 side
of A4
Accessible
overdrafts for a
further 600k
customers
Reward current
account launched,
cashback on
cashback
household bills
3%
11
3. Customer experience
Tailoring our business to changing behaviours
End of 2013
Over 1000% growth in
mobile usage since 2010
16 branch transformations
per week
~3m active mobile
customers
93% of branches re-branded
by end of 2016
447
3,973
0
6,106
Our
expanding
presence
End of 2015
communities served
by mobile bank
vans
639
self service
points
5,544
banking points
available via Post
Office
11,500
Total points
of presence
19,010
12
3. Customer experience
Focus on our customers is starting to deliver results
Royal Bank of Scotland (Scotland)
Net Promoter Scores across our core businesses
NatWest (England & Wales)
RBSG (GB)
Personal Banking(1)
Business Banking(2)
Commercial Banking(3)
30
20
9
10
4
0
(10)
7
6
8
5
12
12
10
4
(4)
(10)
10
(6)
(10)
(13)
(15)
(13)
(17)
(18)
(20)
(11)
(26)
(17)
(23)
(30)
(30)
(40)
Q2
Q3
2014
Q4
Q1
Q2
2015
Q2
Q3
2014
Q4
Q1
Q2
2015
Q2
Q3
2014
Q4
Q1
Q2
2015
(1) Personal Banking: Source GfK FRS, 6 month roll. Latest base sizes: NatWest (3340) RBS (458) Question “How likely is it that you would be to recommend (brand) to a relative, friend or colleague in the next 12 months for current account
banking?” Base: Claimed main banked current account customers. The year on year movement in NatWest Personal NPS is significant.
(2+3)Business & Commercial Banking: Source Charterhouse Research Business Banking Survey, quarterly rolling. Latest base sizes, Business £0-2m NatWest (1219) RBS (415) Commercial 3 £2m+ combination of NatWest & RBS in GB (846)
13
Question: “How likely would you be to recommend (bank)”. Base: Claimed main bank. Data weighted by region and turnover to be representative of businesses in Great Britain. The year on year improvements in Business Banking are
significant.
3. Customer experience
Customers are responding to our investment
We are:
investing in advice
Customers are:
more engaged
Number of mortgage advisors
869
677
-21%
+28%
Mortgage
complaints
Mortgage service
NPS NatWest
+9
H1 2014
H1 2015
H1 2014 / H1 2015
Source: Internal NPS Drivers Study. Latest Bases: NatWest (1233), Question: 'Based on your experience as a (brand) Mortgage customer how likely are you to recommend a (brand) Mortgage to a relative, friend or colleague14
in the next 12 months?‘ Mortgage complaints data based on internal analysis.
4. Supporting growth
Personal and Business Banking
UK Personal & Business Banking – Mortgages
Balances (£bn)
Applications (£bn)
+4%
101.8
+43%
105.4
9.4
Q2 2015
Q2 2014
10%
8%
6.5
Q2 2014
RBS Q2 2015 market share
Q2 2015
Stock share
Flow share
15
4. Supporting growth
Commercial Banking
Positive net lending
Balances, £bn
Gross UK Commercial lending growth
Q2 2015 / Q2 2014
+1.6%
+2.1%
85.7
83.9
-4.0%
Q2 2014
Q2 2015
Market(1)
RBS
Note : Excluding RBSI and CIB transfers.
(1) Lending
to PNFCs (Private Non-Financial Corporations).
16
Our Go-Forward Bank
Ulster Bank, Private Banking and CIB Go-Forward
CIB Go-Forward
Ulster Bank
Private Banking
Illustrative cost:income ratio:
Q2 2015 Adjusted cost:income
Q2 2015 Adjusted cost:income
~100%(1)
ratio: 78%(1)
ratio: 86%(1)
CIB Go – Forward is
undergoing a multi-year
transformation


Income is broadly in line with
expectations given the
reduction in scale and scope

Cost:income ratio is
unacceptably high – aim to
materially reduce

CIB Go – Forward will require
re-platforming of a substantial
part of its IT infrastructure in
order to operate the franchise at
a materially lower cost structure

Accelerated reduction of tracker
portfolio continues to reduce
return drag

Returns benefiting from ongoing
Irish macro recovery triggering
further write-backs

Great Private Banking brands,
but returns are too low

Targeting material productivity
improvements, both on
revenues and costs in the
coming years

Excellent opportunities to
leverage off Commercial
customer base
Clear plan to materially reduce costs and improve productivity in the GoForward franchises
(1)
Adjusted costs excluding restructuring and litigation and conduct costs.
17
Our Go-Forward Bank
CIB Go-Forward is built around core strengths
18
Strong, clear, simple investment proposition
Strong customer franchises in large, attractive
banking market
UK’s pre-eminent SME, Commercial and Corporate bank
Significant potential upside from simplification
and risk reduction
Robust capital, leverage and liquidity positions
We aim to return capital to shareholders above the 13% mid-term CET1 target(1)
(1) Subject to PRA approval. In addition, key milestones before seeking PRA approval for capital distributions would include, among other considerations, reaching the 13% CET1 ratio target, achieving confidence in
sustainable profitability, improved stress-testing results and operating within risk appetite, peak of litigation and conduct costs passed and at least £2 billion of AT1 raised.
19
Forward Looking Statements
Certain sections in this document contain ‘forward-looking statements’ as that term is defined in the United States Private Securities Litigation Reform Act of 1995, such as statements that include the words
‘expect’, ‘estimate’, ‘project’, ‘anticipate’, ‘believe’, ‘should’, ‘intend’, ‘plan’, ‘could’, ‘probability’, ‘risk’, ‘Value-at-Risk (VaR)’, ‘target’, ‘goal’, ‘objective’, ‘may’, ‘endeavour’, ‘outlook’, ‘optimistic’, ‘prospects’ and
similar expressions or variations on these expressions.
In particular, this document includes forward-looking statements relating, but not limited to: The Royal Bank of Scotland Group plc’s (RBS) transformation plan (which includes RBS’s 2013/2014 strategic plan
relating to the implementation of its new divisional and functional structure and the continuation of its balance sheet reduction programme including its proposed divestments of Citizens Financial Group, Inc.
(“CFG”) and Williams & Glyn, RBS’s information technology and operational investment plan, the proposed restructuring of RBS’s CIB business and the restructuring of RBS as a result of the implementation of
the regulatory ring-fencing regime, together the “Transformation Plan”), as well as restructuring, capital and strategic plans, divestments, capitalisation, portfolios, net interest margin, capital and leverage ratios,
liquidity, risk-weighted assets (RWAs), RWA equivalents (RWAe), Pillar 2A, Maximum Distributable Amount (MDA), total loss absorbing capital (TLAC), minimum requirements for eligible liabilities (MREL),
return on equity (ROE), profitability, cost:income ratios, loan:deposit ratios, anticipated AT1 and other capital raising plans, funding and risk profile; litigation, government and regulatory investigations including
investigations relating to the setting of interest rates and foreign exchange trading and rate setting activities; costs or exposures borne by RBS arising out of the origination or sale of mortgages or mortgagebacked securities in the US; investigations relating to business conduct and the costs of resuiting customer redress and legal proceedings; RBS’s future financial performance; the level and extent of future
impairments and write-downs; and RBS’s exposure to political risks, credit rating risk and to various types of market risks, such as interest rate risk, foreign exchange rate risk and commodity and equity price
risk. These statements are based on current plans, estimates, targets and projections, and are subject to inherent risks, uncertainties and other factors which could cause actual results to differ materially from
the future results expressed or implied by such forward-looking statements. For example, certain market risk and other disclosures are dependent on choices relying on key model characteristics and
assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and, as a result, actual future gains and losses could differ materially from those that
have been estimated.
Other factors that could adversely affect our results and the accuracy of forward-looking statements in this document include the risk factors and other uncertainties discussed in the 2014 Annual Report and
Accounts and the 2015 Interim Results. These include the significant risks for RBS presented by the execution of the Transformation Plan; RBS’s ability to successfully implement the various initiatives that are
comprised in the Transformation Plan, particularly the balance sheet reduction programme including the divestment of Williams & Glyn and its remaining stake in CFG, the proposed restructuring of its CIB
business and the significant restructuring undertaken by RBS as a result of the implementation of the ring fence; whether RBS will emerge from implementing the Transformation Plan as a viable, competitive,
customer-focused and profitable bank; RBS’s ability to achieve its capital targets which depend on RBS’s success in reducing the size of its business; the cost and complexity of the implementation of the ringfence and the extent to which it will have a material adverse effect on RBS; the risk of failure to realise the benefit of RBS’s substantial investments in its information technology and operational infrastructure
and systems, the significant changes, complexity and costs relating to the implementation of the Transformation Plan, the risks of lower revenues resulting from lower customer retention and revenue
generation as RBS refocuses on the UK as well as increasing competition. In addition, there are other risks and uncertainties. These include RBS’s ability to attract and retain qualified personnel; uncertainties
regarding the outcomes of legal, regulatory and governmental actions and investigations that RBS is subject to (including active civil and criminal investigations) and any resulting material adverse effect on
RBS of unfavourable outcomes; heightened regulatory and governmental scrutiny and the increasingly regulated environment in which RBS operates; uncertainty relating to how policies of the new government
elected in the May 2015 UK election may impact RBS including a possible referendum on the UK’s membership of the EU and the consequences arising from it; operational risks that are inherent in RBS’s
business and that could increase as RBS implements its Transformation Plan; the potential negative impact on RBS’s business of actual or perceived global economic and financial market conditions and other
global risks; how RBS will be increasingly impacted by UK developments as its operations become gradually more focused on the UK; uncertainties regarding RBS exposure to any weakening of economies
within the EU and renewed threat of default or exit by certain counties in the Eurozone; the risks resulting from RBS implementing the State Aid restructuring plan including with respect to the disposal of certain
assets and businesses as announced or required as part of the State Aid restructuring plan; the achievement of capital and costs reduction targets; ineffective management of capital or changes to regulatory
requirements relating to capital adequacy and liquidity; the ability to access sufficient sources of capital, liquidity and funding when required; deteriorations in borrower and counterparty credit quality; the extent
of future write-downs and impairment charges caused by depressed asset valuations; the value and effectiveness of any credit protection purchased by RBS; the impact of unanticipated turbulence in interest
rates, yield curves, foreign currency exchange rates, credit spreads, bond prices, commodity prices, equity prices; basis, volatility and correlation risks; changes in the credit ratings of RBS; changes to the
valuation of financial instruments recorded at fair value; competition and consolidation in the banking sector; regulatory or legal changes (including those requiring any restructuring of RBS’s operations);
changes to the monetary and interest rate policies of central banks and other governmental and regulatory bodies and continued prolonged periods of low interest rates; changes in UK and foreign laws,
regulations, accounting standards and taxes; impairments of goodwill; the high dependence of RBS’s operations on its information technology systems and its increasing exposure to cyber security threats; the
reputational risks inherent in RBS’s operations; the risk that RBS may suffer losses due to employee misconduct; pension fund shortfalls; the recoverability of deferred tax assets; HM Treasury exercising
influence over the operations of RBS; limitations on, or additional requirements imposed on, RBS’s activities as a result of HM Treasury’s investment in RBS; and the success of RBS in managing the risks
involved in the foregoing.
The forward-looking statements contained in this document speak only as of the date of this announcement, and RBS does not undertake to update any forward-looking statement to reflect events or
circumstances after the date hereof or to reflect the occurrence of unanticipated events.
The information, statements and opinions contained in this document do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of any offer to buy any securities or financial
instruments or any advice or recommendation with respect to such securities or other financial instruments.